ajeng.savitri@teknokrat.ac.id https://teknokrat.ac.id/en/

1. Systems Analysis
and Design
By : Ajeng Savitri P, M.Kom
Pertemuan 10
Prepared by Kevin C. Dittman for
Systems Analysis & Design Methods 4ed
by J. L. Whitten & L. D. Bentley

2. • Learning How to Identifying Business Value
• Learning Feasibility Analysis

3. Identifying Business Value
(System Request)
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4. When Do Projects Begin?
• When someone sees an opportunity to create
business value from using information technology
• Then he or she creates a system request
• Feasibility analysis is used to aid in the decision of
whether or not to proceed with the project
• Project estimation is important activity which aims
to estimating the size of software project
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5. Elements of a System Request
1. Project Name
• The name of project
2. Project sponsor
• Primary point of contact for the project
3. Business need
• Reason prompting the project
4. Business requirements
• Business capabilities the system will need to have
5. Business value
• Benefits the organization can expect from the project
6. Special issues
• Anything else that should be considered
• Budget constraints, deadline, Legal requirements
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6. Business Need
•Describes why the system should be built
•Why the project should be funded
•Should be clear and concise
•Probably not completely defined
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7. Business Requirements
•What the system will do
•High level explanation to the approval
committee
•Tell about the features and capabilities
•Can be replaced by Use Case Diagram
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8. Business Value
•Tangible value
• A quantifiable value
• E.g.: 2 % reduction in operating cost
•Intangible value
• Intuitive believe why the system will help the company
• E.g.: improved customer service, a better competitive position
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9. System Request
Element Description Example
Business Need The business-related
reason for initiating
the software
development project
Increase sales
Improve market share
Improve access to information
Improve customer service
Decrease product defects
Streamline supply acquisition processes
Business
Requirements
The business
capabilities that
software will provide
Provide onIine access to information
Capture customer demographic information
Include product search capabilities
Produce management reports
Include online user support
Business Value The benefits that the
software will create for
the organization
3% increase in sales
% increase in market share
10% operational cost reduction
$200,000 cost savings from decreased supply costs
$150,000 savings from removal of existing system
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10. 10

11. System Request: CD Selection Project
Project Sponsor: Margaret Mooney, Vice President of Marketing
Business Needs: This project has been initiated to reach new Internet customers and
to better serve existing customers using Internet sales support
Business Requirements:
Using the Web, customers should be able to search for products and identify the brick-and-mortar stores that have them in stock. They
should be able to put items on hold at a store location or place an order for items that are not carried or not in stock. The functionality that
the system should have is listed below:
1. Search through the CD Selections’ inventory of products
2. Identify the retail stores that have the product in stock
3. Put a product on hold at a retail store and schedule a time to pick up the product
4. Place an order for products not currently in stock or not carried by CD Selections
5. Receive confirmation that an order can be placed and when it will be in stock
Business Value:
Intangible Value:
 Improve customer satisfaction
 Increase brand recognition due to its Internet presence
Tangible Value:
 Increase sales by reducing lost sales due to out-of-stock or nonstocked items and by reaching out to new customers through its
Internet presence
• $750,000 in increased sales from new customers
• $1,875,000 in increased sales from existing customers
 Reduce customer complaints, primarily because 50 percent of all customer complaints stem from out of stocks or nonstocked items
• $50,000 yearly reduction in customer service calls

12. System Request: CD Selection Project
Project Sponsor: Margaret Mooney, Vice President of Marketing
Business Needs: This project has been initiated to reach new Internet customers and to better serve existing customers using Internet sales
support.
Business Requirements:
Using the Web, customers should be able to search for products and identify the brick-and-mortar stores that have them in stock. They should be able
to put items on hold at a store location or place an order for items that are not carried or not in stock. The functionality that the system should have is
listed below:
1. Search through the CD Selections’ inventory of products
2. Identify the retail stores that have the product in stock
3. Put a product on hold at a retail store and schedule a time to pick up the product
4. Place an order for products not currently in stock or not carried by CD Selections
5. Receive confirmation that an order can be placed and when it will be in stock
Business Value:
Intangible Value:
CD Selections should benefit from improved customer satisfaction and increased brand recognition due to its Internet presence.
Tangible Value:
CD Selections will increase sales by reducing lost sales due to out-of-stock or nonstocked items and by reaching out to new customers through its
Internet presence. Then the improved services will reduce customer complaints, primarily because 50 percent of all customer complaints stem from
out of stocks or nonstocked items. Tangible value estimation:
1. $750,000 in increased sales from new customers
2. $1,875,000 in increased sales from existing customers
3. $50,000 yearly reduction in customer service calls
Special Issues or Constraints:
The Marketing Department views this as a strategic system. This Internet system will add value to our current business model. In the future, CD
Selections may want to sell products directly over the Internet. The system should be in place for the holiday shopping season next year.
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13. Feasibility Analysis
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14. Feasibility Analysis
1. Technical feasibility: Can we build it?
2. Economic feasibility: Should we build it?
3. Organizational feasibility: If we build it, will they
come?
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15. Feasibility Analysis
1 Technical
Feasibility
• Familiarity with application: Less familiarity generates more risk
• Familiarity with technology: Less familiarity generates more risk
• Project size: Large projects have more risk
• Compatibility: The harder it is to integrate the system with the
company’s existing technology, the higher the risk will be
2 Economic
Feasibility
• Return on Investment (ROI)
• Break Even Point (BEP)
• Intangible Benefit
3 Organizational
Feasibility
• Is the software project strategically aligned with the business?
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16. 1. Technical Feasibility
Familiarity with
application
• Knowledge of business domain
• Need to understand improvements
• Need to recognize pitfalls and bad ideas
Familiarity with
technology
• Is technology new to this organization?
• Is this a brand new technology?
• Extension of existing firm technologies
Project size • Number of people, time, and features
Compatibility • Systems are not built in a vacuum
• Needs to integrate with current systems and data
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17. 2. Economic Feasibility: Should We Build It?
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18. Cost-Benefit Analysis - Cash Flow
• Project costs and benefits over several years (3–5)
• Use normal growth rates for sales etc.
• Total added to determine
• Overall Benefits = Total Benefits – Total Costs
• Higher number is better
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19. Present Value (PV)
• The amount of an investment today compared
to the same amount n years in the future
• Taking into account inflation and time
PV =
Amount
(1 + Interest Rate)n
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20. Net Present Value (NPV)
The present value of benefit less the present
value of cost
NPV = PV Benefits – PV Costs
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21. Return on Investment (ROI)
The Amount of revenue or cost savings
results from a given investment
ROI =
Total Benefits – Total Costs
Total Costs
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22. Break Even Point (BEP)
The point in time when the costs of the project
equal the value it has delivered
BEP =
* Use the yearly NPV amount from the first year in which project has
positive cash flow
Yearly NPV* – Cumulative NPV
Yearly* NPV
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23. Break Even Point (BEP)
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24. 3. Organizational Feasibility
•Strategic Alignment
• How well does the project match up with the
business strategy?
•Stakeholder analysis considers
• Project champion (Product Owner)
• Organizational management
• System users
• Anybody affected by the change
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25. Stakeholder Analysis Considers
• Project champion(s)
• High-level non-IS executive
• Shepherds project to completion
• It's good to have more than one
• Organizational management
• Need this support to sell system to organization
• System users
• In the loop so end system meets needs
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26. Stakeholder Analysis Considers
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27. Feasibility Analysis Template
Technical Feasibility: Can We Build It?
1. Familiarity with Application: Less familiarity generates more risk
2. Familiarity with Technology: Less familiarity generates more risk
3. Project Size: Large projects have more risk
4. Compatibility: The harder it is to integrate the system with the company’s
existing technology, the higher the risk
Economic Feasibility: Should We Build It?
1. Return on Investment (ROI) over 3 years
2. Break-even Point (BEP)
3. Total benefit after 3 years
Organizational Feasibility: If We Build It, Will They Come?
1. Project champion(s)
2. Senior management
3. Users
4. Other stakeholders
5. Is the project strategically aligned with the business?
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28. CD Selection Internet Order Feasibility Analysis Executive Summary
Margaret Mooney and Alec Adams created the following feasibility analysis for the CD Selections Internet Order System Project. The System
Proposal is attached, along with the detailed feasibility study
Technical Feasibility
The Internet Order System is feasible technically, although there is some risk.
CD Selections’ risk regarding familiarity with the application is high
• The Marketing Department has little experience with Internet-based marketing and sales
• The IT Department has strong knowledge of the company’s existing order systems; however, it has not worked with Web-enabled
order systems
CD Selections’ risk regarding familiarity with the technology is medium
• The IT Department has relied on external consultants and an Information Service Provider to develop its existing Web environment
• The IT Department has learned about Web technology by maintaining the corporate site
• Development tools and products for commercial Web application development are available in the marketplace, although the IT
department has little experience with them
The project size is considered medium risk
• The project team likely will include less than ten people
• Business user involvement will be required
• The project timeframe cannot exceed a year because of the Christmas holiday season implementation deadline, and it should be
much shorter
The compatibility with CD Selections’ existing technical infrastructure should be good
• The current Order System is a client-server system built using open standards. An interface with the Web should be possible
• Retail stores already place and maintain orders electronically
• An Internet infrastructure already is in place at retail stores and at the corporate headquarters
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29. Economic Feasibility
A cost–benefit analysis was performed; see attached spreadsheet for details. A conservative approach shows that the
Internet Order System has a good chance of adding to the bottom line of the company significantly.
• Return on Investment (ROI) over 3 years: 229 percent
• Break-even point (BEP): after 1.7 years
• Total benefit after three years: $3.5 million (adjusted for present value)
Intangible Costs and Benefits
• Improved customer satisfaction
• Greater brand recognition
Organizational Feasibility
• From an organizational perspective, this project has low risk. The objective of the system, which is to increase sales, is
aligned well with the senior management’s goal of increasing sales for the company. The move to the Internet also aligns
with Marketing’s goal to become more savvy in Internet marketing and sales.
• The project has a project champion, Margaret Mooney, Vice President of Marketing. Margaret is well positioned to sponsor
this project and to educate the rest of the senior management team when necessary. To date, much of senior management
is aware of and supports the initiative.
• The users of the system, Internet consumers, are expected to appreciate the benefits of CD Selections’ Web presence. And,
management in the retail stores should be willing to accept the system, given the possibility of increased sales at the store
level.
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30. Terima Kasih